Malaysia vs India
Malaysian property tax for Indian residents and NRIs
Indian buyers of Malaysian property pay Malaysian taxes as foreigners, and, if resident and ordinarily resident in India, Indian tax on the same rent and gains with credit under the India–Malaysia DTAA. This page compares the two systems as at October 2026 and shows which home-country rules follow you and which stay behind.
In short
Key points
- As a foreign buyer of a Malaysian home you pay a flat 8% stamp duty on the transfer from 1 January 2026, instead of the 1%–4% scale citizens pay.
- Malaysia taxes rent at 30% of net income for non-residents; a resident and ordinarily resident Indian also declares that rent in India and claims credit for the Malaysian tax.
- Malaysian RPGT is 30% on gains in the first five years and 10% from year six; India taxes long-term gains at 12.5%, and credit for RPGT needs care because the treaty does not list it.
- Report the property in Schedule FA every year while resident and ordinarily resident, even if it earns nothing.
- NRIs and RNORs are generally outside Indian tax on Malaysian rent and gains, but still pay Malaysian tax.
At a glance
Malaysia and India side by side
| Stage | Malaysia (you as a foreign owner) | India (home rules) |
|---|---|---|
| Buying | Stamp duty on transfer: flat 8% for foreigners on residential homes from 1 January 2026; 0.5% on a Malaysian loan agreement | Stamp duty and registration charges set by each state; buyer deducts 1% TDS on Indian property purchases of ₹50 lakh or more |
| Funding | Purchase price remitted from abroad | LRS limit USD 250,000 per financial year; 20% TCS above ₹10 lakh, claimable as credit |
| Owning | Quit rent to the state; assessment to the local council | Municipal property tax set by the local body |
| Renting | Non-resident individuals: flat 30% of net rent | House-property income: municipal tax and 30% standard deduction, then slab rates |
| Selling | RPGT for non-citizens: 30% in years 1–5, 10% from year 6; buyer retains 7% | Long-term after 24 months: 12.5% without indexation (transfers from 23 July 2024) |
| Reporting | Form M for rent; RPGT return on sale | Schedule FA, FSI and TR; Form 67 or Form 44 for foreign tax credit |
Sources: LHDN; MOF Budget 2026 tax measures; Income Tax Department and India–Malaysia DTAA text; RBI LRS; seen October 2026.
Who is taxed
Your Indian residential status decides most of it
Malaysia taxes you the same way whatever your Indian status. India does not.
Resident and ordinarily resident (ROR)
Taxed in India on worldwide income. Malaysian rent and gains go into the Indian return, with credit for Malaysian tax. The property is reported in Schedule FA every year.
Resident but not ordinarily resident (RNOR)
Generally not taxed in India on foreign income that is neither received in India nor from a business controlled from India. No Schedule FA.
Non-resident Indian (NRI)
Generally not taxed in India on Malaysian rent or gains. The Malaysian taxes still apply in full.
Malaysian residence is separate: it turns on days in Malaysia (broadly 182 days in a calendar year). Most Indian owners are non-resident in Malaysia, which is why the 30% flat rate applies to their rent.
Buying
Buying: stamp duty, state rules and LRS
Malaysia charges citizens stamp duty on a 1%–4% scale. Non-citizen individuals (except Malaysian PRs) and foreign companies pay a flat rate, raised in Budget 2026 from 4% to 8% for residential homes transferred from 1 January 2026. States add minimum prices for foreigners, generally RM1 million or more in Kuala Lumpur and Johor, and Johor charges a consent levy of 3% of the price or RM30,000, whichever is higher.
From the Indian side, residents send the money under the Liberalised Remittance Scheme: up to USD 250,000 per person per financial year, with 20% TCS above ₹10 lakh, which you claim back as a credit in your return. FEMA limits borrowing abroad against the purchase. See buying Malaysian property from India for the funding route and Malaysian loans for foreigners for bank finance in Malaysia.
Renting
Rent: Malaysia first, then India
- Malaysia: 30% of rent after allowable expenses such as assessment, quit rent, loan interest, fire insurance, repairs and collection commission. File Form M for each calendar year. Residential lettings are outside Malaysia’s service tax on rental.
- India (ROR only): the rent is income from house property; deduct municipal taxes paid, then the 30% standard deduction, and add the result to income at your slab rate.
- Credit: India credits the Malaysian tax up to the Indian tax on the same income. Use Form 67 for FY 2025-26; from tax year 2026-27 Form 44 under the Income-tax Rules, 2026 replaces it.
- Timing: Malaysia’s year runs January to December and India’s April to March, so Malaysian tax has to be apportioned.
The full treaty walk-through, including Articles 6, 14 and 24, is on Indian tax on Malaysian property and the DTAA.
Selling
Selling: RPGT and Indian capital gains
| Holding period | Malaysian RPGT (non-citizen) | India (ROR) |
|---|---|---|
| Up to 24 months | 30% | Short-term: slab rate |
| 25 months to 5 years | 30% | Long-term: 12.5% without indexation |
| Year 6 onwards | 10% | Long-term: 12.5% without indexation |
Sources: LHDN RPGT rates (Part III); Income Tax Department, long-term capital gains; seen October 2026. Indian surcharge and cess are extra.
The buyer retains 7% of the price for LHDN within 60 days. The India–Malaysia treaty lets Malaysia tax the gain, but its list of covered Malaysian taxes names income tax and petroleum income tax, not RPGT. Whether India gives credit for RPGT therefore needs a CA’s view before you sell, particularly in the first five years. See selling property in Johor.
Practical steps
A checklist for Indian owners
- Keep LRS records (Form A2, bank advices, TCS certificates) with the sale and purchase agreement.
- List the property in Schedule FA each year while ROR, on a calendar-year basis.
- Register with LHDN if you let the property and keep expense receipts.
- Before selling, ask your CA how RPGT will be treated in India.
- Plan succession with a Malaysian will; see will writing in Malaysia.
Straight answers
Frequently asked questions
Do NRIs pay tax in India on Malaysian rental income?
Generally no. NRIs and RNORs are not taxed in India on foreign income of this kind. Malaysia still taxes the rent at 30% of net income if you are non-resident there.
Is there a DTAA between India and Malaysia?
Yes. The agreement signed on 9 May 2012 applies in India from 1 April 2013. It lets Malaysia tax rent and gains from Malaysian property and requires India to credit the Malaysian tax for its residents.
Can I claim foreign tax credit for Malaysian RPGT in India?
It is not straightforward because RPGT is not listed among the Malaysian taxes the treaty covers. Ask a chartered accountant before you sell.
What stamp duty does an Indian citizen pay on a Malaysian home?
A flat 8% of the price or market value on the transfer of a residential home from 1 January 2026, plus 0.5% on a Malaysian loan agreement, and any state consent fee or levy.
Do I need to show Malaysian property in my ITR if it has no income?
Yes, if you are resident and ordinarily resident. It goes in Schedule FA every year; the penalty for omitting it can be ₹10 lakh.
How much can I remit under LRS to buy property in Malaysia?
Up to USD 250,000 per person per financial year, with 20% TCS on amounts above ₹10 lakh, which you can claim as a credit against your tax.
Compare
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